Pre-feasibility Study SETTING UP GENERAL MEDICAL AND SURGICAL HOSPITAL November 2021 The figures and financial projections are approximate due to fluctuations in exchange rates, energy costs, and fuel prices etc. Users are advised to focus on understanding essential elements such as production processes and capacities, space, machinery, human resources, and raw material etc. requirements. Project investment, operating costs, andrevenues can change daily. For accurate financial calculations, utilize financial calculators on SMEDA’s website and consult financial experts to stay current with market conditions. Small and Medium Enterprises Development Authority Ministry of Industries and Production Government of Pakistan Pre-Feasibility Study Setting Up General Medical and Surgical Hospital Table of Contents 1. DISCLAIMER .................................................................................................. 4 2. EXECUTIVE SUMMARY ................................................................................. 5 3. INTRODUCTION TO SMEDA ......................................................................... 6 4. PURPOSE OF THE DOCUMENT ................................................................... 7 5. BRIEF DESCRIPTION OF PROJECT & Services ......................................... 8 5.1 Services ....................................................................................................... 8 5.2 PROCESS FLOW OF HOSPITAL FOR OPD AND SURGERY ................. 13 5.3 PROCESS FLOW OF HOSPITAL FOR EMERGENCY ............................. 14 5.4 Installed and Operational Capacities ......................................................... 14 6. CRITICAL FACTORS ................................................................................... 18 7. GEOGRAPHICAL POTENTIAL FOR INVESTMENT ................................... 18 8. POTENTIAL TARGET MARKET .................................................................. 18 9. PROJECT COST Summary ......................................................................... 19 9.1. Project Economics ..................................................................................... 20 9.2. Initial Project Cost Estimates ..................................................................... 20 9.1.1. 9.1.2. 9.1.3. 9.1.4. 9.1.5. 9.1.6. 9.1.7. 9.1.8. 9.1.9. 9.1.10. 9.1.11. 9.1.12. 9.1.13. 9.1.14. 9.1.15. 9.1.16. 9.1.17. 9.1.18. Land .................................................................................................... 21 Building ............................................................................................... 22 Medical Machinery and Equipment ..................................................... 23 Hospital Machinery and Equipment .................................................... 25 Furniture and Fixture........................................................................... 26 Office Vehicles .................................................................................... 26 Office Equipment ................................................................................ 27 Medical Books .................................................................................... 28 Pre-Operating Cost ............................................................................. 28 Security against Building..................................................................... 28 Legal and Licensing Fee ..................................................................... 28 Breakeven Analysis ............................................................................ 29 Revenue Generation ........................................................................... 29 Variable Cost ...................................................................................... 32 Fixed Cost Estimate ............................................................................ 34 Financial Feasibility Analysis .............................................................. 35 Financial Feasibility Analysis with 50% Debt ...................................... 35 Human Resource ................................................................................ 35 10. CONTACT DETAILS ..................................................................................... 37 11. USEFUL LINKS and contacts ..................................................................... 38 12. ANNEXURES ................................................................................................ 40 12.1. Income Statement ...................................................................................... 40 12.2. Balance Sheet............................................................................................ 41 12.3. Cash Flow Statement ................................................................................. 42 November 2021 1 Pre-Feasibility Study 13. Setting Up General Medical and Surgical Hospital KEY ASSUMPTIONS .................................................................................... 43 13.1. Operating Cost Assumptions ..................................................................... 43 13.2. Revenue Assumptions ............................................................................... 43 13.3. Financial Assumptions ............................................................................... 43 13.4. Debt Related Assumptions......................................................................... 44 13.5. Cash Flow Assumptions ............................................................................ 44 November 2021 2 Pre-Feasibility Study Setting Up General Medical and Surgical Hospital Table of Tables Table 1: Installed and Operational Capacity for OPD ..................................................... 15 Table 2: Installed and Operational Capacity for OPD ..................................................... 15 Table 3: Installed and Operational Capacity for Surgeries ............................................. 16 Table 4: Installed and Operational Capacity for General Ward & Private Room ........ 17 Table 5: Installed and Operational Capacity for Emergency .......................................... 17 Table 6: Installed and Operational Capacity for Diagnostic Lab ................................... 17 Table 7: Initial Project Cost Estimate ................................................................................. 20 Table 8: Land Area Breakup................................................................................................ 21 Table 9: Building Renovation Cost ..................................................................................... 22 Table 10: Medical Machinery & Equipment ...................................................................... 23 Table 11: Hospital Machinery and Equipment .................................................................. 25 Table 12: Furniture and Fixtures ......................................................................................... 26 Table 13: Office Vehicles ..................................................................................................... 26 Table 14: Office Equipment ................................................................................................. 27 Table 15: Medical Books ...................................................................................................... 28 Table 16: Pre-Operating Cost ............................................................................................. 28 Table 17: Security against Building .................................................................................... 28 Table 18: Legal and Licensing Fee .................................................................................... 28 Table 19 : Breakeven Analysis............................................................................................ 29 Table 20: Revenue Generation ........................................................................................... 29 Table 21: Reveneue from General OPD and Emergency .............................................. 29 Table 22: Revenue from Specialist OPD........................................................................... 30 Table 23: Revenue from OT ................................................................................................ 30 Table 24: Revenue from Wards and Rooms .................................................................... 31 Table 25: Revenue from Diagnostic Lab ........................................................................... 31 Table 26:Revenue from Rent .............................................................................................. 31 Table 27: Variable Cost ........................................................................................................ 32 Table 28: Patient Consumables .......................................................................................... 32 Table 29: Other Consumables ............................................................................................ 33 Table 30:Diagnostic Lab Consumables ............................................................................. 34 Table 31: Fixed Cost Estimate ............................................................................................ 34 Table 32: Financial Feasibility Analysis ............................................................................. 35 Table 33: Financial Feasibility Analysis with 50% Debt .................................................. 35 Table 34: Human Resource Requirement......................................................................... 35 Table 35: Suppliers of Equipment & Supplies .................................................................. 37 Table 36: Useful Links .......................................................................................................... 38 Table 37: Healthcare Commissions - Contact Numbers................................................. 39 Table 38: Operating Cost Assumptions ............................................................................. 43 Table 39: Revenue Assumptions ........................................................................................ 43 Table 40: Financial Assumptions ........................................................................................ 43 Table 41: Debt Related Assumptions ................................................................................ 44 Table 42: Cash Flow Assumptions ..................................................................................... 44 November 2021 3 Pre-Feasibility Study 1. Setting Up General Medical and Surgical Hospital DISCLAIMER This information memorandum is to introduce the subject matter and provide a general idea and information on the said matter. Although, the material included in this document is based on data/information gathered from various reliable sources; however, it is based upon certain assumptions, which may differ from case to case. The information has been provided on as is where is basis without any warranties or assertions as to the correctness or soundness thereof. Although, due care and diligence has been taken to compile this document, the contained information may vary due to any change in any of the concerned factors, and the actual results may differ substantially from the presented information. SMEDA, its employees or agents do not assume any liability for any financial or other loss resulting from this memorandum in consequence of undertaking this activity. The contained information does not preclude any further professional advice to be obtained by the user. The prospective user of this memorandum is encouraged to carry out additional diligence and gather any information which is necessary for making an informed decision, including taking professional advice from a qualified consultant/technical expert before taking any decision to act upon the information. For more information on services offered by SMEDA, please contact our website: www.smeda.org.pk Document Control Document No. 228 Prepared by SMEDA-Punjab (OS) Revision Date November 2021 For information helpdesk.punjab@smeda.org.pk November 2021 4 Pre-Feasibility Study 2. Setting Up General Medical and Surgical Hospital EXECUTIVE SUMMARY Hospital is an institution established for diagnosis and treatment of people suffering from different types of diseases. A hospital usually provides both medicine consultancy and surgical services to treat the sick people. The hospitals usually offer both outpatient and inpatient services to the people coming for treatment. Under the outpatient services, a person may consult the doctor available in the hospital to get his expert opinion on his health-related issues. Such patients are not admitted into the hospital for longer treatments. In contrast, under the inpatient services, the sick people are admitted into the hospital to provide them closer and/or sustained medical treatment or for performing any requried surgical procedures to treat their aliments. The duration of stay of a patient in the hospital depends upon the nature and specific needs of a patient’s disease and treatment. A General medical and surgical hospital is established to provide healthcare services in a broad category of illness and/or injury cases. General Medicine is a speciality of medical profession which is involved in the prevention, diagnosis, and treatment of a wide range of diseases affecting different systems of the body. Doctors specializing in general or internal medicine are known as General Physicians. In addition to General Physicians, doctors specializing in different organs of human body also provide outpatient medical services in hospitals. General Surgery is a broad term which refers to carrying out routine surgical procedures to treat the issues identified in the internal parts of the body. General surgery usually does not cover vital organs like heart, liver, brain, lungs, etc. General surgeons usually cover diseases and injuries relating to the abdomen, chest, groin, digestive system and thyroid. In addition to the regular outpatient and inpatient services, a hospital also provides emergency services to handle cases which require an immediate and urgent medical attention and treatment. The proposed General Medical and Surgical Hospital offers the regular outpatient, inpatient and 24 hours basic emergency services. The propsoed hosptial maintains beds in general ward and private rooms and emergency ward. It is also equipped with the diagnsotic services to conduct basic blood tests, x-rays, ultrasound and ECG (Electrocardiogram). This pre-feasibility document provides details for “Setting up General Medical and Surgical Hospital”. The proposed project has an annual capacity of treating 14,400 patients in General Outpatient Department (OPD) and 28,800 patients in Specialist OPD, carrying out 2,160 surgeries and handling 12,960 emergency patients. The hospital has an occupancy capacity of 4,320 General Ward days, 1,440 ICU Ward day and 1,440 Private Room days. The capacity utilization in the first year of operations is assumed to be 60%, which translates into 8,640 and 17,280 general and specialist OPD patients respectively, 1,298 surgery patients, 7,776 emergency patients and 2,592 occupancy days for General Ward and 864 annual occupancy days each for ICU Ward and Private Rooms each. The maximum capacity utilization of the proposed project is assumed to be 90% which is achieved in the seventh year of operation. November 2021 5 Pre-Feasibility Study Setting Up General Medical and Surgical Hospital The proposed project requires a total investment of PKR 47.71 million. This includes capital investment of PKR 43.7 million and working capital of PKR 4 million. This project is financed through 100% equity. The Net Present Value (NPV) of project is PKR 153.9 million with an Internal Rate of Return (IRR) of 53% and a Payback period of 2.56 years. Further, this project is expected to generate Gross Profit (GP) ratio ranging from of 36% to 45% and Net Profit (NP) ratio ranging from 5% to 17% during the projection period of ten years. The proposed project will achieve its estimated breakeven point at capacity of 41% (34,840 patients) with breakeven revenue of PKR 42.62 million. The proposed project may also be established using leveraged financing. At 50% financing at a cost of KIBOR+3%, the proposed unit provides Net Present Value (NPV) of PKR 173.42 million, Internal Rate of Return (IRR) of 52% and Payback period of 2.65 years. Further, this project is expected to generate Net Profit (NP) ratio ranging from 4% to 17% during the projection period of ten years. The proposed project will achieve its estimated breakeven point at capacity of 41% (35,025 patients) with breakeven revenue of PKR 42.62 million. The proposed project will provide employment opportunities to 90 people. High return on investment and steady growth of business is expected with the professionals having some prior experience and expertise in the related field of business. The legal business status of this project is proposed as a partnership concern. 3. INTRODUCTION TO SMEDA The Small and Medium Enterprises Development Authority (SMEDA) was established in October 1998 with an objective to provide fresh impetus to the economy through development of Small and Medium Enterprises (SMEs). With a mission "to assist in employment generation and value addition to the national income, through development of the SME sector, by helping increase the number, scale and competitiveness of SMEs", SMEDA has carried out ‘sectoral research’ to identify policy, access to finance, business development services, strategic initiatives and institutional collaboration and networking initiatives. Preparation and dissemination of prefeasibility studies in key areas of investment has been a successful hallmark of SME facilitation by SMEDA. Concurrent to the prefeasibility studies, a broad spectrum of business development services is also offered to the SMEs by SMEDA. These services include identification of experts and consultants and delivery of need-based capacity building programs of different types in addition to business guidance through help desk services. National Business Development Program for SMEs (NBDP) is a project of SMEDA, funded through Public Sector Development Program of Government of Pakistan. The NBDP envisages provision of handholding support / business development services to SMEs to promote business startup, improvement of efficiencies in existing November 2021 6 Pre-Feasibility Study Setting Up General Medical and Surgical Hospital SME value chains to make them globally competitive and provide conducive business environment through evidence-based policy-assistance to the Government of Pakistan. The Project is objectively designed to support SMEDA's capacity of providing an effective handholding to SMEs. The proposed program aimed at facilitating around 314,000 SME beneficiaries over a period of five years. 4. PURPOSE OF THE DOCUMENT The objective of the pre-feasibility study is primarily to facilitate potential entrepreneurs in project identification for investment. The project pre-feasibility may form the basis of an important investment decision and in order to serve this objective, the document/study covers various aspects of project concept development, start-up, and production, marketing, finance and business management. The purpose of this document is to provide information to the potential investors about setting-up a “General Medical and Surgical Hospital”. The document provides a general understanding of the business to facilitates potential investors in crucial and effective investment decisions. The need to come up with pre-feasibility reports for undocumented or minimally documented sectors attains greater imminence as the research that precedes such reports reveal certain thumb rules; best practices developed by existing enterprises by trial and error, and certain industrial norms that become a guiding source regarding various aspects of business setup and its successful management. Apart from carefully studying the whole document one must consider critical aspects provided later on, which form the basis of any investment decision. November 2021 7 Pre-Feasibility Study 5. Setting Up General Medical and Surgical Hospital BRIEF DESCRIPTION OF PROJECT & SERVICES A general medical and surgical hospital provides a wide range of medical and surgical services to inpatient, outpatient and emergency patients. Under the outpatient services, a person may consult the doctor available in the hospital to get his expert opinion on his health-related issues. These patients are not admitted into the hospital for longer treatments. Whereas, inpatient hospital services means longer healthcare services provided to patients who have to be admitted into the hospital and are required to remain in that hospital for one or more days. Furthermore, the proposed hospital also provides 24-hour emergency services. A brief description of the offered services is as follows: 5.1 Services The proposed hospital provides services six days a week for OPD, four days a week Operation Theater (OT) services for conducting surgeries and seven days a week for Emergency cases. OPD and OT operates for twelve hours a day with morning and evening shifts of six hours while the emergency is operational round the clock (24 hours) without any break during a year. The visiting surgeons are engaged for performing surgeries. The surgeons receive 60% of their service charges as their income and this amount is included one of the direct costs of the hospital. Furthermore, General ward and Private room facilities are also available if a patient needs to be admitted for longer treatments (inpatient services). Emergency An emergency room or emergency department is a medical treatment facility that specializes in providing medical services which are required on urgent basis (such as persons suffering accidents, strokes, etc.). Therefore such patients are treated without an appointment in the emergency department. Outpatient Department (OPD) In OPD, the patient can seek consultation with a general physician or a specialist doctor to discuss his health-related issues. It is the first interaction between the patient and the doctor. The proposed hospital provides two types of OPD services; general and specialized. General OPD General OPD healthcase services are provided by General Physicians. A General Physician is a doctor who deals with the diagnosis and treatment of general health problems or disorders ranging from cold, cough, fever, pain and nausea to chronic diseases such as jaundice, cholera, etc. Apart from diagnosing and treating health problems, the General Physicians also advise the patients about their diet, health plans and any requried preventive measures. In certain complicated cases, the General Physcian may refer the patient to a medical or surgical specialist. People can come to this OPD without any appointment and they are treated on first-come-firstserved basis. November 2021 8 Pre-Feasibility Study Setting Up General Medical and Surgical Hospital Specialist OPD Specialist OPD provides the services of specialist doctors who have special expertise in any specific one body system/part or in specific area of medical knowledge. Specialist doctors are available in all fields of medicine. The following specialists will be visiting the proposed hospital: Cardiologist is a doctor who specializes in treating diseases of the cardiovascular system, mainly the heart and blood vessels. Neurophysician is a doctor who specializes in treating diseases of the nervous system. It includes the brain and spinal cord. Orthopaedic Surgeon are doctors who specialize in the musculoskeletal system - the bones, joints, ligaments, tendons, and muscles that are so essential to movement and everyday life. Gastroenterologist specializes in the branch of medicine that focuses on the digestive tract and the gallbladder, liver, bile ducts, and pancreas. Ophtalmologists are the medical doctors who specialize in treating eye and vision problems. Pulmonologist is a doctor who diagnoses and treats diseases of the respiratory system which includes the lungs and other organs that help a person breathe. Paediatrics are the doctors who manage medical conditions affecting infants, children and young people. Gynaecologist is a doctor who specializes in female reproductive health. They diagnose and treat issues related to the female reproductive tract. This includes the uterus, fallopian tubes, and ovaries and breasts. Urologists are the doctors who diagnose and treat diseases of the urinary tract in both men and women. The urinary tract includes two kidneys, two ureters, a bladder, and a urethra. They also diagnose and treat anything involving the reproductive tract in men. Nephrologists is a physician who specializes in the care and treatment of kidney diseases. Dermatologist is a doctor who specializes in conditions involving the skin, hair, and nails. ENT Specialist is an ear, nose, and throat doctor (ENT) who specializes in everything having to do with these body parts. General Surgeon is a specialist who is trained to diagnose, treat, and manage patients with a broad spectrum of surgical conditions affecting almost any area of the body. Endocrinologist is a doctor who specializes in the diagnosis and treatment of hormone-related diseases and conditions. November 2021 9 Pre-Feasibility Study Setting Up General Medical and Surgical Hospital Psychiatrist specializes in mental health, including substance use disorders. Physiotherapists help people affected by injury, illness or disability by movement and exercise, manual therapy, education and advice. They maintain health for people of all ages, helping patients to manage pain and prevent disease. In the proposed hospital all the specialists are assumed to be the visiting doctors. Each specialist doctor is available for three hours for six days per week. Share of revenue for the hospital is 40% of the total revenue from patients checked by the specialist doctors, while the balance 60% is the remuneration of the respective doctor; and a direct cost for the hospital. Diagnostic Tests The proposed hospital also provides the following basic diagnostic testing services. Complete Blood Count (CBC) Complete Blood Count (CBC) is a group of tests used to evaluate the composition of the blood. The cell calculates the shares of different constituents of the blood (such as red blood cells (RBCs), white blood cells (WBCs), platelets (PLTs), etc.) with reference to the standard blood composition. CBC test provides information about the overall health of a person and indicates towards different kinds of diseases and conditions; associated with the changes in relative shares of different blood constituents. ABO Typing Test (Blood Group) Blood typing is a method to tell what type of blood a person has. Blood typing is often done so a person can safely donate blood or receive a blood transfusion. A person’s blood type is based on whether or not certain proteins are present on red blood cells. These proteins are called antigens. The blood type (or blood group) depends on what types the parents passed down. Blood is often grouped according to the ABO blood typing system. The four major blood types are Type A, Type B, Type AB and Type O. This service is commonly required as a part of performing surgerical treatments. X-Ray X-Ray is an image of organs, tissues and bones of the body. These images are produced with the help of radiations. An X-ray is normally conducted to examine an area where a patient is experiencing pain or discomfort. Ultrasound Ultrasound, also called sonography, is a medical test that uses high frequency sound waves to capture live images from inside a patient’s body. Ultrasound test is performed when a patient is having pain, swelling, or other symptoms that require an internal view of organs i.e., kidney, liver, spleen, bladder, ovaries, uterus, pancreas, thyroid, blood vessels, etc. November 2021 10 Pre-Feasibility Study Setting Up General Medical and Surgical Hospital Intensive Care Unit (ICU) ICU is a special department of a hospital or healthcare facility that provides intensive treatment medicine and caters to patients with severe and life-threatening illnesses and injuries; the ones which require constant, close monitoring and immediate attention of the specialist doctors. General Surgical Services General Medical and Surgical unit is maintained for treatment of ailments which require the use of surgical procedures. It includes the following surgeries: Appendectomy It is the surgical removal of the appendix. It is a common emergency surgery that is performed to treat appendicitis, which is an inflammatory condition of the appendix. The appendix is a small, tube-shaped pouch attached to the large intestine. Gallstone A cholecystectomy is a surgical procedure to remove the gall bladder, a pear shaped organ just below the liver on the upper right side of the abdomen. The gall bladder collects and stores bile, a digestive fluid produced in the liver. A cholecystectomy is a common surgery, and it carries only a small risk of complications. In most cases, the patient can go home the same day or the day after the surgery. Hernia A hernia occurs when part of an internal organ or body part swells into an area where it should not. The most common hernias occur in the abdominal area. A small portion of the intestine, or a piece of fat, pushes through a weak area in the muscular wall of the abdomen. This causes an abnormal swelling under the skin of the abdomen, usually near the groin or navel. The hernia surgery or herniorrhaphy involves returning the displaced tissues to their proper position. Hemorrhoids Hemorrhoids surgery removes swollen blood vessels inside or around the anus and rectum. Doctors refer to these swollen vessels as hemorrhoids. There are different surgical options for treating hemorrhoids that cause a person discomfort. Laparotomy Laparatomy is a surgical incision (cut) into the abdominal cavity. This operation is performed to examine the abdominal organs and aid diagnosis of any problems, including abdominal pain. Gastrectomy A gastrectomy is often used to treat stomach disorders. A gastrectomy is a surgery in which part or all of the stomach is removed. A gastrectomy may be used to treat obesity, peptic ulcers, a perforation (hole) in the stomach, or some forms of cancer. When part of the stomach is removed, it is called a partial, or a subtotal, gastrectomy. November 2021 11 Pre-Feasibility Study Setting Up General Medical and Surgical Hospital Removing the stomach does not take away the patient’s ability to digest liquids and foods. However, several lifestyle changes are to be made after the procedure. Bowel/Colon Resection A bowel resection or enterectomy is a surgical procedure in which a part of an intestine is removed, from either the small intestine or large intestine. The goal of bowel resection is to take out the part of the colon or rectum where the problem is identified. Thyroidectomy Thyroidectomy is the surgical removal of all or part of the thyroid gland, a butterflyshaped gland located at the base of the neck. It produces hormones that control every aspect of the metabolism, from heart rate to how quickly the calories are burnt. Thyroidectomy is used to treat thyroid disorders, such as cancer, noncancerous enlargement of the thyroid and overactive thyroid (hyperthyroidism). Percutaneous Nephrolithotomy Percutaneous nephrolithotomy (PCNL) is a procedure used to remove kidney stones from the body when they cnnot pass out on their own. A scope is inserted through a small incision in body to remove the kidney stones. It is most suitable to remove stones of more than 2 cm in size. November 2021 12 Pre-Feasibility Study 5.2 Setting Up General Medical and Surgical Hospital PROCESS FLOW OF HOSPITAL FOR OPD AND SURGERY Appointment A customer may visit or call the reception of the hospital to inquire about doctor’s schedule. The receptionist provide information about the hospital’s schedule i.e time, counsultancy fee, etc after that he/she may get an appointment to consult his/her relevant doctor. Consultation At this step, the doctor meets with the patient and obtains his medical history. Analyzing the condition of the patient, the doctor may prescribe medicines and may suggest a date for follow up examination. Doctor may also recommend any necessary diagnostic tests before prescibing medicines. If needed, the doctor may also advise the patient about food and supplements and any required physical activities. File Preparation And Payment for OPD Patient file is prepared which includes personal information. In case, the treatment involves surgical procedures, the patient is informed about that. For OPD service, only fee will be charged. Admission to Hospital & Payment for Test and Surgery In case the patient is willing to go for the surgery, he is admitted into the hospital. Consent forms are signed by the patient before the surgery. Tests and surgery charges /fee are paid in advance in the accounts department. Time and date of surgery is conveyed to the patient. Basic Tests Surgery is performed after conducting basic tests from pathology laboratory such as Complete Blood Count (CBC), ABO Typing Test, X-Ray, Ultra Sound, etc. Surgery After analysing the test reports, the doctor conducts the respective surgery. The time period of performing diffferent surgeries varies accordingly. In some severe cases, the surgery might take longer than normal time. November 2021 13 Pre-Feasibility Study Setting Up General Medical and Surgical Hospital Recovery Room /Ward After the surgery, patient is shifted to a recovery room where he is attended by doctors and nurses. Once the patient’s condition stablizes, he is shifted to general ward or private room. Discharge After the recovery of patients, their documentation is completed and discharge slips are prepared by the administration staff after payment of any dues remaining if any. The patients are discharged from the hospital. 5.3 PROCESS FLOW OF HOSPITAL FOR EMERGENCY Patient's Arrival Consultation & Treatment Payment Patient's Discharge Patient's Arrival There is no need for appointment in the emergency department as the patients who come to emergency need urgent assistance and treatment. Consultation and Treatment The doctor checks the patient and obtains their medical history and the current problems of the patient. Analyzing his condition, the doctor prescribes immediate measures including medicines, injections, etc. The doctor may also recommend any necessary diagnostic tests before prescibing medicines. Payment After checkup, bill is generated by account staff and payment is made by customer. Patient’s Discharge Patient’s arriving in emergency required immediate treatment. Once the patient’s condition becomes stable, he is discharged from emergancy. In case patient’s condition is not stable or required further treatment advice of specialist doctor may be sought and/or he may be admitted into the hospital. 5.4 Installed and Operational Capacities The proposed hospital provides services six days a week for General OPD, Specialist OPD and Diagnostic Lab, four days a week for Operation Theatre (OT) and seven days a week for Emergency. General OPD and OT will operate twelve hours a day with morning and evening shifts of six hours while in Specialist OPD each specialist November 2021 14 Pre-Feasibility Study Setting Up General Medical and Surgical Hospital doctor will be avialable for 3 hours during each working day. Emergency department will be operational 24 hours a day, round the year. The proposed project has an annual capacity of treating 14,400 patients in General Outpatient Department (OPD) and 28,800 patients in Specialist OPD, carrying out 2,160 surgeries and handling 12,960 emergency patients. The hospital has an occupancy capacity of 4,320 general ward days, 1,440 ICU ward days and 1,440 private room days. However, during initial year of operation, the proposed hospital is expected to obtain 60% of its installed capacity. The operations of proposed business are assumed to increase at a rate of 5% annually, reaching 90% capacity utilization during 7th year of operations. Table 1, Table 3, Table 4,Table 5 and Table 6 show the installed and operational capacities of OPD, Surgeries, General Ward, Private room, ICU Ward and Emergency and Diagnostic Lab respectively. Table 1: Installed and Operational Capacity for OPD Services Number Time of /Patient Doctors (hrs) Available Hours/Year No of Patients at 100% Capacity No. of Patients at 60 % Capacity Utilization A B C=A*3600(Annual Working Hours) D=C/B E=D*60% 2 0.50 7,200 14,400 8,640 General OPD Table 2: Installed and Operational Capacity for OPD Services Number of Doctors Time /Patient (hrs) Available Hours/Year No of Patients at 100% Capacity No. of Patients at 60 % Capacity Utilization A B C=A*900(An nual Working Hours) D=C/B E=D*60% Cardiologist 1 0.50 900 1,800 1,080 Neurophysician 1 0.50 900 1,800 1,080 Orthopaedic Surgeon 1 0.50 900 1,800 1,080 Gastroenterolog ist 1 0.50 900 1,800 1,080 Opthalmologist 1 0.50 900 1,800 1,080 Specialist OPD November 2021 15 Pre-Feasibility Study Setting Up General Medical and Surgical Hospital Pulmonologist 1 0.50 900 1,800 1,080 Paediatrics 1 0.50 900 1,800 1,080 Gynaecologist 1 0.50 900 1,800 1,080 Urologist 1 0.50 900 1,800 1,080 Nephrologist 1 0.50 900 1,800 1,080 Dermatologist 1 0.50 900 1,800 1,080 ENT Specialist 1 0.50 900 1,800 1,080 General Surgeon 1 0.50 900 1,800 1,080 Endocrinologist s 1 0.50 900 1,800 1,080 Psychiatrist 1 0.50 900 1,800 1,080 Physiotherapist 1 0.50 900 1,800 1,080 28,800 17,280 Total Table 3: Installed and Operational Capacity for Surgeries % of Patients who are recommended surgery from OPD Services 15% Annual Capacity Ratios No of Patients at 100% Capacity No. of Patients at 60 % Capacity Utilization A=15%*14,400 (No. of OPD patients) B C=A*B D=C*60% Appendectomy 10% 216 130 Gallstone 10% 216 130 Hernia 10% 216 130 Hemorrhoids 10% 216 130 13% 281 169 Gastrectomy 12% 259 155 Bowel/Colon Resection 10% 216 130 Thyroidectomy 10% 216 130 Nephrectomy 15% 324 194 2,160 1,298 Surgeries Laparotomy 2,160 Total November 2021 16 Pre-Feasibility Study Setting Up General Medical and Surgical Hospital Table 4: Installed and Operational Capacity for General Ward & Private Room Services Number of Beds Annual Occupancy (Days) @100% Capacity Annual Occupancy (Days) @60% Capacity Utilization A B=A*360 C=B*60% General Ward 12 4,320 2,592 Private Room 4 1,440 864 ICU Ward 4 1,440 864 Total 20 7,200 4,320 Table 5: Installed and Operational Capacity for Emergency Services Emergency Number of Beds Available Hours/Year Average Time /Patient (hours) No of Patients at 100% Capacity No. of Patients at 60 % Capacity Utilization A B=A*8,640(Annual Working Hours) C D=B/C E=D*60% 6 51,840 4 12,960 7,776 Table 6: Installed and Operational Capacity for Diagnostic Lab Description Total no. of OPD Patients OPD Test Per Patients Year requiring Annual Tests Capacity Complete Blood Count (CBC) 28,800 7,200 7,200 ABO Typing Group) 28,800 7,200 7,200 X-Ray 28,800 2,880 2,880 Ultra Sound 28,800 2,880 2,880 November 2021 Test (Blood 17 Pre-Feasibility Study 6. Setting Up General Medical and Surgical Hospital CRITICAL FACTORS Following factors should be taken into account while making the decision to invest in General Medical and Surgical Hospital: 7. Engagement of reputed specialists Employment of trained and professional nurses and other staff Maintenance of high standards of patients' care Compliance with the standards of hygiene Usage of modern, reliable medical equipment along with proper sterilization Arrangement of skillful operators of the machines Courteous administrative staff for customer satisfaction Accurate maintenance of patients’ records Regular feedback and follow up visits by the patients Uninterrupted supply of electricity power GEOGRAPHICAL POTENTIAL FOR INVESTMENT The patient rate is growing day by day and current health care facilities in the country are not enough to accomadate all patients which creates the need for new hospitals and clinics in every city/town of Pakistan.The proposed hospital would ideally be located near populated rural or urban areas to provide services to the local population. The proposed hospital would ideally be located in large to medium cities like Karachi, Lahore, Peshawar, Islamabad, Multan, Quetta, Sialkot, Mardan, Gujranwala, Hyderabad, Gilgit, Muzaffabad, Sahiwal, Rawalpindi, Bahawalpur, Sukkur, Sahiwal, Gujrat, Skardu, Dera Ghazi Khan, Larkana, Khuzdar, Layyah, Nowshera, etc. Locating the proposed business in these cities would provide advantage of being close to larger population clusters to provide better treatment to the people. The disposable incomes of the people living in these cities are high which makes it affordable for them to use the healthcare facilities of such private hospitals. 8. POTENTIAL TARGET MARKET Hospitals occupy an important place in the world's healthcare system, providing personal care for people suffering from different ailments. Hospitals benefit from the increasing demand for healthcare services in a growing customer base due to ageing population and less inclination towards a hygeinic lifestyle. Pakistan is the fifth most populous country in the world, with 227.12 million people, having an annual population growth rate of 1.8%, which means addition of around 4 million people every year. This increase in population keeps generating additional November 2021 18 Pre-Feasibility Study Setting Up General Medical and Surgical Hospital demand for health coverage. According to Economic Survey of Pakistan 2020-21,1 in the year 2020, Pakistan’s health infrastructure comprised of 1,282 hospitals, 5,472 BHUs,2 670 RHCs,3 5,743 Dispensaries, 752 Maternity & Child Health Centres and 412 TB4 Centres. Total availability of beds in these health facilities was 133,707. Although public health expenditure has been increasing over the years but it stiil remains insufficient to ensure provision of quality healthcare to the entire population. The number of doctors registered in Pakistan at present are about 110,000.5 It is estimated that around 25,000 Pakistani doctors are working abroad. Remaining 85,000 are working within Pakistan. Pakistan’s population is about 220 million, which translates into a ratio of one doctor for 2588 persons. The doctor to population ratio, recommended for developing countries like Pakistan by World Health Organization (WHO) is 1 doctor for 1,000 persons. The private sector plays a vital role in the delivery of healthcare services in Pakistan. A rising population pressure on the state’s health institutions has made it essential that the private sector comes forward to bridge the rising demand-supply gap. With increasing disposable incomes and changing lifestyles, people prefer to go to private hospitals due to availability of state-of-the-art facilities, safe and quality healthcare services, flexible timings and a patient-centric approach. In Pakistan, many different diseases exist only due to poor quality of food and hygiene and less inclination towards exercises and a healthy lifestyle. Few major cities of Pakistan are included in top most polluted cities of the world. Due to these factors, the number of patients in Pakistan are increasing day by day. Health Insurance Card (Sehat Card) issued by government, allows underprivileged people to access private hospitals. It can be used for surgeries. This grants access to every person, rich or poor to private hospitals for better teatment. 9. PROJECT COST SUMMARY A detailed financial model has been developed to analyze the commercial viability of the proposed business. Various costs and revenue related assumptions along with results of the analysis are outlined in this section. The projected Income Statement, Cost of Goods Sold, Cash Flow Statement and Balance Sheet are attached as Annexure. 1 https://www.finance.gov.pk/survey_2021.html A Baic Health Unit (BHU) serves up to 25,000 people with basic medical and surgical care, preventive services, maternal and child healthcare services. 3 A Rural Health Center (RHC), with an additional facility of 10-20 inpatient beds, dental and ambulance services, serves a catchment population of up to 100,000 people 4 Tuberculosis Centres 5 https://ayubmed.edu.pk/JAMC/PAST/161/AJKhan.htm#:~:text=The%20doctor%20population%20ratio%2Frec ommended,to%20fulfill%20our%20own%20needs. 2 November 2021 19 Pre-Feasibility Study Setting Up General Medical and Surgical Hospital 9.1. Project Economics All the figures in this financial model have been calculated after carefully taking into account the relevant assumptions and target market. 9.2. Initial Project Cost Estimates The details of initial project cost calculated for the proposed business are shown in Table 7. Table 7: Initial Project Cost Estimate Description Land Cost Reference - 9.1.1 Building / Infrastructure 5,333,010 9.1.2 Medical Machinery and Equipment 17,884,000 9.1.3 Hospital Machinery and Equipment 4,059,000 9.1.4 Furniture & fixtures 2,465,000 9.1.5 Office Vehicles 1,242,300 9.1.6 Office equipment 6,355,000 0 Medical Books 1,000,000 9.1.8 764,489 9.1.9 Security Against Building 4,500,000 9.1.10 Legal and Licensing Fee 100,000 9.1.11 Pre-operating costs 43,702,799 Total Capital Cost Working capital Patient Consumables Inventory 512,313 Office Consumables Inventory 102,125 1,500,000 Upfront building rent Upfront insurance payment 388,738 Cash 1,500,000 Total Working capital 4,003,176 Total Investment 47,705,975 November 2021 20 Pre-Feasibility Study Setting Up General Medical and Surgical Hospital 9.1.1. Land The hospital will be established in a rented building to avoid the high cost of land. Suitable locations for setting up a hospital like this can be found on rent. Therefore, no land cost has been added to the project cost. The proposed hospital will be set up on three floors that are parking, ground floor and first floor. Total space requirement for the proposed unit has been estimated as 20,250 sq. ft. The breakup of the space requirement is provided in Table 8. Table 8: Land Area Breakup Description % Break-Up Number Area (Sq. Ft.) Basement 33% 1 6,750 Reception/ Nurses Counter 1% 1 300 Waiting Area 2% 1 500 Surgical Consultant Room 1% 1 270 Operation Theatre (OT) 3% 2 600 Waiting Area for Operation Theatre (OT) 1% 1 280 Recovery Room 3% 1 640 Admin Department 1% 1 150 Washrooms 1% 5 250 Store Room 2% 1 400 General OPD 2% 1 400 Emergency Room 4% 1 750 Specialist Doctors Consultation Rooms 7% 4 1,440 Blood Bank 1% 1 160 Specialist Doctors Common Room 1% 1 270 Corridor 1% 1 160 Stairs 0.5% 1 100 Lift Area 0.4% 1 80 Parking Ground Floor Sub Total 6,750 First Floor Private Room 5% 4 960 Nurses Room 1% 1 210 Procurement Department 1% 1 160 November 2021 21 Pre-Feasibility Study Setting Up General Medical and Surgical Hospital HR Department 1% 1 180 General Ward 5% 1 1,000 ICU Ward 2% 1 400 Diagnostic Lab 3% 1 600 Physiotherapy Room 1% 1 300 Washrooms 2% 10 400 Medical Officer Office 1% 1 240 Medical Store 2% 1 500 Canteen 2% 1 400 Waiting Area 4% 1 800 Kitchen 0.4% 1 80 Prayer Area 1% 1 180 Corridor 1% 1 160 Stairs 0.5% 1 100 Lift Area 0.4% 1 80 Sub Total 6,750 Total Area 100% 20,250 9.1.2. Building There will be no cost of building since the unit will be started in a rented premise. However, there will be a renovation cost; required to make the building usable for the hospital. The proposed project requires electricity load of 21 KW for which an electricity connection under the General Supply Tariff-Commercial three phase will be required. Building rent of PKR 1,500,000 per month has been included in the operating cost. Building renovation cost is shown in Table 9. Table 9: Building Renovation Cost Units of Measurement Total Units Cost/Unit (PKR) Paint Cost Liter 417 600 250,200 Labour Cost Sq. Feet 41,706 10 417,060 Wall Racks No. 49 15,000 735,000 Lockers No. 23 30,000 690,000 Particulars Woodwork Cost Curtains November 2021 Total Cost (PKR) 1,000,000 No. 27 22 5,000 135,000 Pre-Feasibility Study Setting Up General Medical and Surgical Hospital Blinds No. 20 5,000 100,000 Glass Door and PartitionGround Floor Sq. Feet 1,737 550 955,350 Glass Door and Partition- 1st Floor Sq. Feet 1,728 550 950,400 Painting & Decorative & Medical Charts 100,000 TOTAL (PKR) 5,333,010 9.1.3. Medical Machinery and Equipment Table 10 gives details of the medical machinery and equipment required for the project. Table 10: Medical Machinery & Equipment Cost Item No. Unit Cost (PKR) Total Cost (PKR) Ventilator 2 1,800,000 3,600,000 Patients Monitor 6 70,000 420,000 Defibrillator 5 250,000 1,250,000 Suction Machine 5 50,000 250,000 BiPap 5 200,000 1,000,000 OT Lights with Halogen Bulbs 4 250,000 1,000,000 General Surgery Set 6 35,000 210,000 Appendectomy Set 4 15,000 60,000 Gallstone Surgery Set 4 20,000 80,000 Hernoia Surgery Set 4 12,000 48,000 Hemorrhoidictomy Set 4 15,000 60,000 Thyroidectomy Set 4 20,000 80,000 Laparotomy Set 4 22,000 88,000 X-ray Illuminator (2 Film) 6 5,000 30,000 Patient Monitor 8 70,000 560,000 ICU Equipment Surgery Related Equipment and Tools Physiotherapy Equipment November 2021 23 Pre-Feasibility Study Setting Up General Medical and Surgical Hospital Therapeutic Ultrasonic 1 750,000 750,000 Electrotherapy TENS Machine 5 10,000 50,000 Vibrators & Massagers 20 3,000 60,000 Foot massager and pain releiver 4 20,000 80,000 Interferential Electric Muscle Stimulator 2 25,000 50,000 Diathermic- Shortwave CDB-1 1 150,000 150,000 Diathermic- Mediumwave CDB-1 1 150,000 150,000 Shoulder Pullies 5 2,000 10,000 Static Cycle 1 50,000 50,000 Magnetic Exercise Cycle 1 60,000 60,000 Gym Ball 5 5,000 25,000 Quadriceps strengthening Machine 2 50,000 100,000 Automated / Digital Tractions 1 150,000 150,000 Automated Treadmill 1 100,000 100,000 Digital Water bath 2 25,000 50,000 CBC Analyzer 1 400,000 400,000 Compound Digital Microscope (Mechanical Stage:130×140mm Moving Range 75mm×45mm) 2 45,000 90,000 Ultrasound - Color Doppler Machine (17'' LED, Cine loop: 1024 frames) 1 1,050,000 1,050,000 Thermal Ultrasound Printer 1 100,000 100,000 1 1,500,000 1,500,000 X-Ray Illuminators 4 5,000 20,000 X-Ray Printer 2 30,000 60,000 Autoclave 2 15,000 30,000 Stethoscope 12 2,500 30,000 Gluco Meter 12 5,000 60,000 Head Torch 12 1,000 12,000 Blood Pressure Monitor Set 12 2,000 24,000 Weigh Scale (310 g, 220 V) 12 11,000 132,000 Diagnostic Lab Equipment Digital X-Ray Machine (35KW, inverted Frequency: 50khz) Main OPD Equipment November 2021 24 Pre-Feasibility Study Setting Up General Medical and Surgical Hospital Medical Thermometer 12 1,000 12,000 Examination Light 8 3,000 24,000 ECG Machine 2 150,000 300,000 First aid Kits 10 5,000 50,000 Reflex Hammer 10 100 1,000 Magnifiers 8 1,500 12,000 Dressing Kits 10 300 3,000 Instrument Sterilizer 5 25,000 125,000 Testing Meter (insulin level) 6 10,000 60,000 Medical Oxygen Concentrator 16 100,000 1,600,000 Oxygen cylinders 16 20,000 320,000 Nebulizer 16 3,000 48,000 Generator (24 Kw) 1 1,250,000 1,250,000 Other Equipment Total 17,884,000 9.1.4. Hospital Machinery and Equipment Table 11 gives details of the medical machinery and equipment required for the project. Table 11: Hospital Machinery and Equipment Cost Item Number of Items Unit Cost (PKR) Total Cost (PKR) Hospital Beds 26 18,000 468,000 Examination Couch 11 12,000 132,000 Adjustable Stool 6 6,000 36,000 Bed Side Table Set 26 16000 416,000 Over Bed Table 30 8,000 240,000 Benches 8 13,000 104,000 Wheel Chair 10 12,000 120,000 Stretcher 10 11,000 110,000 OT Table/Bed 2 120,000 240,000 Equipment Trolly 16 10,000 160,000 November 2021 25 Pre-Feasibility Study Setting Up General Medical and Surgical Hospital ICU Beds 4 200,000 800,000 Attendent's Couch 18 6,000 108,000 Mattress 26 15,000 390,000 Stretcher trolly 4 15,000 60,000 IV Stand With plastic wheel 26 5,000 130,000 Ward screen 4-Fold 14 5,000 70,000 Wheel Chairs 6 25,000 150,000 Bed Pan 30 2,000 60,000 Foot Steps 30 2,000 60,000 Waste Bin 30 2,000 60,000 Medical Waste Bin 6 7,500 45,000 Sound/AnnouncementSystem 1 100,000 100,000 Total 4,059,000 9.1.5. Furniture and Fixture Table 12 gives details of the furniture and fixture required for the project. Table 12: Furniture and Fixtures Cost Item Number of Items Unit Cost (PKR) Total Cost (PKR) Executive Tables 10 30,000 300,000 Executive Chairs 12 20,000 240,000 General Table 25 25,000 625,000 Reception Counter 1 40,000 40,000 Sofa Set 12 35,000 420,000 General Chairs 84 10,000 840,000 2,465,000 Total 9.1.6. Office Vehicles Details of vehicles required for the project is given in Table 13. Table 13: Office Vehicles Cost Item Number of Vehicles Unit Cost (PKR) Bolan Van 1 1,150,000 1,150,000 Bikes 1 80,000 80,000 November 2021 26 Total (PKR) Pre-Feasibility Study Setting Up General Medical and Surgical Hospital Registration Charges 1% 12,300 Total 1,242,300 9.1.7. Office Equipment Details of office equipment of the hospital are given in Table 14. Table 14: Office Equipment Cost Item Number of Items Unit Cost (PKR) Total Cost (PKR) Laptop Computers 5 80,000 400,000 Printers 4 40,000 160,000 Desktop Computer 4 30,000 120,000 Security System (2MP) 30 2,000 60,000 DVR 3 12,000 36,000 LED 12 40,000 480,000 Air Conditioners (1.5 ton Inverter) 34 90,000 3,060,000 Ceilling Fan 38 5,000 190,000 Exhaust Fan 22 3,000 66,000 Water Dispensers 5 20,000 100,000 Wi-Fi / Internet Routers 4 5,000 20,000 Telephone Sets 14 2,000 28,000 UPS (Complete Installation 3000 Inverter) 4 250,000 1,000,000 Private Rooms Refrigerator 7 60,000 420,000 Refrigerator 1 100,000 100,000 Coffee/Tea-maker 1 15,000 15,000 Microwave Oven 2 30,000 60,000 Pump-motor (1.5 HP) 2 20,000 40,000 Total November 2021 6,355,000 27 Pre-Feasibility Study Setting Up General Medical and Surgical Hospital 9.1.8. Medical Books Details of medical books for the hospital is given in Table 15. Table 15: Medical Books Cost Item Number of Books Unit Cost (PKR) 100 10,000 Medical Books Total Cost (PKR) 1,000,000 9.1.9. Pre-Operating Cost Details of pre operating cost of the hospital is given in Table 16. Table 16: Pre-Operating Cost Cost Item Number of Months Total Cost (PKR) Administration expenses 1 530,000 Utilities expenses 1 234,489 Total (PKR) 764,489 9.1.10. Security against Building Details of security against rented building for the project is given in Table 17. Table 17: Security against Building Description Security Building Months Rent per Month (PKR) 3 1,500,000 against Total (PKR) 4,500,000 9.1.11. Legal and Licensing Fee Details of legal licensing fee required for the project is given in Table 18. Table 18: Legal and Licensing Fee Cost Item Total Cost (PKR) License Fee For Hospital6 6 100,000 https://www.phc.org.pk/licensingfee.aspx November 2021 28 Pre-Feasibility Study Setting Up General Medical and Surgical Hospital 9.1.12. Breakeven Analysis Table 19 shows calculation of breakeven analysis. Table 19 : Breakeven Analysis Description Amount First Year (PKR) Ratios Sales (PKR) – A 159,309,000 100% Variable Cost (PKR) – B 106,982,867 67% Contribution (PKR) (A-B) = C 52,326,133 33% Fixed Cost (PKR) – D 42,624,556 27% Breakeven Revenue (PKR) 42,624,556 Number of patients at Breakeven 34,840 Breakeven Capacity 41% 9.1.13. Revenue Generation Table 20: Revenue Generation Revenue (PKR) Services Reference General OPD 8,640,000 Emergency 7,776,000 Specialists OPD 43,200,000 Table 22 OT (Surgeries) 53,955,000 Table 23 General Ward 7,776,000 Private Room 12,960,000 ICU Ward 17,280,000 Diagnostic Lab 5,616,000 Table 25 Rent received 2,106,000 Table 26 Total Revenue (PKR) Table 21 Table 24 159,309,000 Table 21: Reveneue from General OPD and Emergency No. of Patients @ 60% Initial Capacity Service Charges (PKR) General OPD 8,640 1,000 8,640,000 Emergency 7,776 1,000 7,776,000 Services November 2021 29 Revenue (PKR) Pre-Feasibility Study Setting Up General Medical and Surgical Hospital Table 22: Revenue from Specialist OPD Specialist OPD No. of Patients @ 60% Initial Capacity Service Charges (PKR) Revenue(PKR) Cardiologist 1,080 2,700,000 Neurophysician 1,080 2,700,000 Orthopaedic Surgeon 1,080 2,700,000 Gastroenterologist 1,080 2,700,000 Opthalmologist 1,080 2,700,000 Pulmonologist 1,080 2,700,000 Paediatrics 1,080 2,700,000 Gynaecologist 1,080 Urologist 1,080 2,700,000 Nephrologist 1,080 2,700,000 Dermatologist 1,080 2,700,000 ENT Specialist 1,080 2,700,000 Immunologist 1,080 2,700,000 Endocrinologists 1,080 2,700,000 Psychiatrist 1,080 2,700,000 Physiotherapist 1,080 2,700,000 Total 17,280 43,200,000 2,500 2,700,000 Table 23: Revenue from OT No. of Patients @ 60% Initial Capacity Service Charges (PKR) Revenue (PKR) Appendectomy 130 30,000 3,900,000 Gallstone 130 35,000 4,550,000 Hernia 130 40,000 5,200,000 Hemorrhoids 130 30,000 3,900,000 Laparotomy 169 30,000 5,070,000 Gastrectomy 155 85,000 13,175,000 Bowel/Colon Resection 130 35,000 4,550,000 Thyroidectomy 130 45,000 5,850,000 Surgeries November 2021 30 Pre-Feasibility Study Setting Up General Medical and Surgical Hospital Percutaneous Nnephrolithotomy 194 40,000 Total (PKR) 1,298 7,760,000 53,955,000 Table 24: Revenue from Wards and Rooms Annual Occupancy (Days)@ 60% Initial Capacity Service Charges (PKR) Revenue (PKR) General Ward 2,592 3,000 7,776,000 Private Room 864 15,000 12,960,000 ICU Ward 864 20,000 17,280,000 Total 4,320 Services 38,016,000 Table 25: Revenue from Diagnostic Lab Test Per Year @ 60% Initial Capacity Charges Per Test (PKR) Revenue (PKR) Complete Blood Count (CBC) 4,320 500 2,160,000 ABO Typing Test (Blood Group) 4,320 200 864,000 X-Ray 1,728 700 1,209,600 Ultra Sound 1,728 800 1,382,400 Total 12,096 Tests 5,616,000 Table 26:Revenue from Rent Description Area (sq. feet) Rent/ Sq.feet per month (PKR) Rent - Medical Store 500 120 60,000 720,000 Rent- Canteen 400 120 48,000 576,000 Rent- Parking 6,750 10 67,500 810,000 175,500 2,106,000 Total November 2021 31 Total Income / Month (PKR) Total Income / Year (PKR) Pre-Feasibility Study Setting Up General Medical and Surgical Hospital 9.1.14. Variable Cost Variable costs of the project have been provided in Table 27. Table 27: Variable Cost Description of Costs Amount (PKR) Patient Consumables (Table 28) 4,649,230 Surgeon Charges (60% of revenue from OT) 32,373,000 Specialist Charges (60% of revenue from Specialists OPD) 25,920,000 Other Consumables (Table 29) 1,225,500 Diagnostic Lab Consumables (Table 30) 273,024 Direct Labour Cost 35,160,000 Electricity 2,813,872 Utilities (Water, Gas, Internet) 722,400 Communications expense (phone, internet etc.) 433,440 Office vehicles running and maintenance expense 1,753,461 Office expenses (stationery, entertainment, janitorial services, etc.) Office Consumables 433,440 1,225,500 Total (PKR) 106,982,867 Table 28: Patient Consumables Cost Item Number of Items Unit Cost (PKR) Total Cost (PKR) Cotton Absorbent (Packs) 500 Grams Pack 433 500 216,500 Bandages Pack (12 Pieces) 649 400 259,600 Syringes (pack of 20) 5,192 40 207,680 Anesthesia (Complete) 1,298 3,000 3,894,000 Surgical Spirit ( 5L Pack) 65 100 6,500 Tissue Papers/Rolls 433 150 64,950 4,649,230 Total November 2021 32 Pre-Feasibility Study Setting Up General Medical and Surgical Hospital Table 29: Other Consumables Cost Item Unit of Measurement Number of Items Unit Cost (PKR) Total Cost (PKR) Surgical Face Mask Packs 416 150 62,400 Surgical Gloves Packs 208 1,300 270,400 Medical Overall 10 700 7,000 OT Shoes 10 1,000 10,000 Scrubs 4 1,100 4,400 Sterilization Towel 10 1,600 16,000 Povidone-iodine 208 100 20,800 Hand Sanitizer 720 250 180,000 Syringe Needle Cutter 6 300 1,800 Sweeper Kit 2 20,000 40,000 Polythene gloves Packs 208 50 10,400 Paper Napkins Packs 360 250 90,000 Mop 12 200 2,400 Bucket 6 500 3,000 Besoms 12 250 3,000 Phenyle 120 160 19,200 Floor Broomer 10 270 2,700 Tissue papers 3,300 90 297,000 Tissue rolls 5,400 20 108,000 Soaps 12,000 Insecticides 15,000 Air Fresheners 15,000 Towels 20,000 Cotton Rolls 15,000 Total November 2021 1,225,500 33 Pre-Feasibility Study Setting Up General Medical and Surgical Hospital Table 30:Diagnostic Lab Consumables Cost Item Number of Items Unit Cost (PKR) Total Cost (PKR) Glass vial 7,200 8 57,600 Glass Slides 144 30 4,320 Lancets 7,200 5 36,000 X Ray Film 2,880 100 288,000 Ultrasound Gel (Grams) 2,880 24 69,120 455,040 Total (A) Initial Year Capacity Utilization (B) 60% Initial Year Diagnostic Lab Consumables (C=A*B) 273,024 9.1.15. Fixed Cost Estimate Table 31 shows the estimated fixed cost of the project. Table 31: Fixed Cost Estimate Description of Costs Annual cost (PKR ) Administration expense 14,448,000 Administration benefits expense 1,488,240 Building rental expense 18,000,000 Promotional expense 796,545 Insurance expense 388,738 Professional fees (legal, audit, consultants, etc.) Depreciation expense 1,593,090 5,737,046 Amortization of pre-operating costs 152,898 Amortization of legal, licensing, and training costs 20,000 Total (PKR) November 2021 42,624,556 34 Pre-Feasibility Study Setting Up General Medical and Surgical Hospital 9.1.16. Financial Feasibility Analysis The financial feasibility analysis provides the information regarding projected IRR, NPV and payback period of the study, which is shown in Table 32. Table 32: Financial Feasibility Analysis Description Project IRR 53% NPV (PKR) 153,897,153 Payback Period (years) 2.56 Projection Years 10 Discount rate used for NPV 15% 9.1.17. Financial Feasibility Analysis with 50% Debt The financial feasibility analysis provides the information regarding projected IRR, NPV and payback period of the study on the basis of Debt: Equity Model (50:50), which is shown in Table 33. Table 33: Financial Feasibility Analysis with 50% Debt Description Project IRR 52% NPV (PKR) 173,422,454 Payback Period (years) 2.65 Projection Years 10 Discount rate used for NPV 13% 9.1.18. Human Resource For the 1st year of operations, the hospital shall require the workforce at a salary cost shown in Table 34. Table 34: Human Resource Requirement Post No. of Employee s Monthly Salary (PKR) Total Salary per Month (PKR) Annual Salary (PKR) CEO 1 250,000 250,000 3,000,000 Admin and HR Manager 1 100,000 50,000 1,200,000 Admin Assistant 2 50,000 100,000 1,200,000 November 2021 35 Pre-Feasibility Study Setting Up General Medical and Surgical Hospital 1 100,000 50,000 1,200,000 Assistant Accountant 2 40,000 80,000 960,000 Procurment Officer 1 70,000 70,000 840,000 Assistant Officer 1 40,000 40,000 480,000 HR Assisstant 1 40,000 40,000 480,000 Store Keeper 2 40,000 80,000 960,000 Accounts Manager and Finance Procurement Technical Staff 0 General Physician 2 175,000 350,000 4,200,000 Junior Doctor 5 100,000 500,000 6,000,000 Anaesthesiologists 2 40,000 80,000 960,000 Nurses 29 40,000 1,160,000 13,920,000 OT Staff 4 50,000 200,000 2,400,000 X-Ray Technician / Radiological Technologist 1 50,000 50,000 600,000 X-Ray Printing - 1 50,000 50,000 600,000 Sonographer (Ultrasound Technician) 1 50,000 50,000 600,000 Lab Technician 2 50,000 100,000 1,200,000 Lab Assistants 2 30,000 60,000 720,000 Receptionist 2 40,000 80,000 960,000 Sweeper 6 22,000 132,000 1,584,000 Security Guard 15 22,000 330,000 3,960,000 Office Boy 6 22,000 132,000 1,584,000 Total 90 Technician November 2021 49,608,000 36 Pre-Feasibility Study Setting Up General Medical and Surgical Hospital 10. CONTACT DETAILS Names of some relevant medical and surgical equipment suppliers are provided in Table 35. Table 35: Suppliers of Equipment & Supplies Name Item Contact No E.mail/Website Advance Systems – Karachi, Islamabad, Lahore Surgical Equipment 02134553632 0512854026 04237429665 www.advancesystems. com.pk Medco – Peshawar Medical Equipment 091-2212702 www.medco.net.pk Strongman Medical Products – Faisalabad Medical/ Surgical Supplies 0418810078 www.strongmanonline. com Health Care Supplies – Karachi Hospital Supplies 02134820375 www.healthcaresuppli es.com.pk Medtronic – Ireland Medical Solutions +3531438170 0 www.medtronic.com Johnson & Johnson – USA Medical Devices +1732524040 0 www.jnj.com Terumo Corporation, Japan Medical +8133374811 Tools and 1 Equipment Abbot Laboratories, Pakistan Diagnostic Tools 042 35854141 www.pk.abbott Coloplast Group , Denmark Medical Devices +4549111111 November 2021 37 www.terumo.com www.coloplast.com Pre-Feasibility Study Setting Up General Medical and Surgical Hospital 11. USEFUL LINKS AND CONTACTS Table 36: Useful Links Name of Organization Website Small and Medium Enterprises Development Authority (SMEDA) www.smeda.org.pk National Business Development Program (NBDP) www.nbdp.org.pk Ministry of National Health Services Regulations and Coordination www.nhsrc.gov.pk/ Specialized Healthcare and Medical Education Department Lahore health.punjab.gov.pk/ Government of Punjab punjab.gov.pk/ Government of Sindh sindh.gov.pk/ Government of Balochistan balochistan.gov.pk/ Government of KPK kp.gov.pk/ Government of Gilgit Baltistan gilgitbaltistan.gov.pk/ Government of Azad Jammu & Kashmir ajk.gov.pk/ Ministry of National Health Services Regulations and Coordination www.nhsrc.gov.pk World Health Organization www.who.int National Institute of Health www.nih.org.pk/ Pakistan Medical Commission www.pmc.gov.pk Security and Exchange Commission of Pakistan www.secp.gov.pk State Bank of Pakistan www.sbp.gov.pk November 2021 38 Pre-Feasibility Study Setting Up General Medical and Surgical Hospital Table 37: Healthcare Commissions - Contact Numbers Name of Organization Website Contact Islamabad Healthcare Regulatory Authority https://ihra.gov.pk 051-9199902 Punjab Healthcare Commission https://www.phc.org.pk 042-99333161 Sindh Healthcare Commission http://shcc.org.pk 111-117-422 Khyber Pakhtunkhwa Healthcare Commission http://hcc.kp.gov.pk 091-9213242 Balochistan Healthcare Commission https://balochistan.gov. pk/departments/health/ 081-9202287 Directorate of Health Services Gilgit Baltistan - 05811-920280 Department of Health Services Azad Jammu & Kashmir https://health.ajk.gov.pk 0582-2920015 November 2021 39 Pre-Feasibility Study Setting Up General Medical and Surgical Hospital 12. ANNEXURES 12.1. November 2021 Income Statement 40 ` Pre-Feasibility Study 12.2. November 2021 Setting Up General Medical and Surgical Hospital Balance Sheet 41 ` Pre-Feasibility Study 12.3. November 2021 Setting Up General Medical and Surgical Hospital Cash Flow Statement 42 ` Pre-Feasibility Study Setting Up General Medical and Surgical Hospital 13. KEY ASSUMPTIONS 13.1. Operating Cost Assumptions Table 38: Operating Cost Assumptions Description Details Building rent growth rate 10% Furniture and fixture depreciation 15% Vehicle depreciation 15% Office equipment depreciation 15% Inflation rate 10.1% Wage growth rate 9.7% Electricity price growth rate 9% Office equipment price growth rate 9.6% Office vehicle price growth rate 6.2% 13.2. Revenue Assumptions Table 39: Revenue Assumptions Description Details Service charges growth 10.1% Initial year capacity utilization 60% Capacity utilization growth rate 5% Maximum capacity utilization 90% 13.3. Financial Assumptions Table 40: Financial Assumptions Description Details Project life (Years) 10 Debt: Equity 0:100 Discount Rate 15% November 2021 43 Pre-Feasibility Study 13.4. Setting Up General Medical and Surgical Hospital Debt Related Assumptions Table 41: Debt Related Assumptions Description of Cost Details Project Life (Years) 10 Debt: Equity 50:50 Discount Rate 13% Debt Tenure 5 years Grace Period 1 Year Interest Rate (KIBOR+3%) 10.3% 13.5. Cash Flow Assumptions Table 42: Cash Flow Assumptions Description Details Accounts receivable cycle (in days) - Accounts payable cycle (in days) - November 2021 44 Small and Medium Enterprises Development Authority HEAD OFFICE 4th Floor, Building No. 3, Aiwan-e-Iqbal Complex, Egerton Road, Lahore Tel: (92 42) 111 111 456, Fax: (92 42) 36304926-7 www.smeda.org.pk, helpdesk@smeda.org.pk REGIONAL OFFICE PUNJAB REGIONAL OFFICE SINDH REGIONAL OFFICE KPK REGIONAL OFFICE BALOCHISTAN 3rd Floor, Building No. 3, Aiwan-e-Iqbal Complex, Egerton Road Lahore, Tel: (042) 111-111-456 Fax: (042) 36304926-7 helpdesk.punjab@smeda.org.pk 5TH Floor, Bahria Complex II, M.T. Khan Road, Karachi. Tel: (021) 111-111-456 Fax: (021) 5610572 helpdesk-khi@smeda.org.pk Ground Floor State Life Building The Mall, Peshawar. Tel: (091) 9213046-47 Fax: (091) 286908 helpdesk-pew@smeda.org.pk Bungalow No. 15-A Chaman Housing Scheme Airport Road, Quetta. Tel: (081) 831623, 831702 Fax: (081) 831922 helpdesk-qta@smeda.org.pk
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